Outboard Marine Will Cut 1,000 Jobs

Warns More Action May Be Necessary

Three months after its chief executive bailed out to a competitor, the highly leveraged Outboard Marine Corp. said Tuesday that it will cut 1,000 jobs from its workforce of 7,200 this month.

The Waukegan-based boat and engine manufacturer also said it had hired investment banker Houlihan Lokey Howard & Zukin to explore other alternatives.

"A reduction like this is always difficult, especially when it affects a large number of employees," said Roger Fix, OMC's president and chief executive. "However, it is clear that we must take more aggressive steps to reduce costs in response to the slowdown affecting marine product sales."

The company's woes are nothing new. In 1997, impatient investors, including financier George Soros, took the company private in a $373 million leveraged buyout.

But so far, their efforts to get the struggling company back on track have not been successful. Despite aggressive cost cutting, including plant closings and hundreds of layoffs, OMC has continued to lose money, forcing it to go deeper into debt.

On top of its latest workforce cut of 14 percent, OMC also announced Tuesday that it will consolidate its Chris-Craft and Four Winns powerboat operations at Four Winns' headquarters in Cadillac, Mich.

John Anderson, who heads Four Winns, will lead the newly created Recreational Boat Group. Two other executives--Kim Bors, president of the Chris-Craft unit, and Bob Beagle, president of the Stratos/Javelin fishing-boat unit--are leaving the company. Chris Wainscott, a sales and marketing executive, will replace Beagle.

But the maker of Johnson and Evinrude motors warned that more actions might be taken if the company's operating performance doesn't improve in light of a weakening recreational marine market.

The company also said Tuesday that it made its Dec. 1 interest payment on its 10.75 percent notes, as scheduled.

In late October, OMC amended its credit agreement with senior lenders, giving it added liquidity for operations. As part of that, an affiliate of Soros Fund Management pumped another $45 million into the company. Soros is OMC's principal investor.

For the first six months of the year, OMC reported a loss of $59.5 million, or $2.92 per diluted share, on sales of $565.7 million.

The company has notified the Securities and Exchange Commission that its third-quarter report will be late.

In late August, CEO David Jones resigned, and OMC's directors elected Fix, then the company's chief operating officer, to succeed him. Jones' departure came shortly after OMC acknowledged in a quarterly filing with the SEC that if it didn't come up with additional financing and "substantially improve" its performance, it would run out of cash before the end of the year.